Shares of Orthopedic Firms Drop Over Probe

Shares of Zimmer Holdings Inc., Stryker Corp. and Biomet Inc. plunged Monday as the companies, makers of artificial hips and knees, disclosed a federal investigation of the $7-billion-a-year orthopedic industry.

The Justice Department’s antitrust division demanded records back to 2001 on how Biomet, Stryker and Zimmer make and sell orthopedic devices, the companies said in separate statements. Johnson & Johnson’s orthopedics unit said federal investigators carried out searches and issued subpoenas.

The four companies, the world’s top makers of replacement joints, and Smith & Nephew, Europe’s largest, last year reported subpoenas in a federal probe of contracts with surgeons.

The Justice Department is “conducting an antitrust investigation into the possibility of anti-competitive conduct in the implant device industry,” department spokeswoman Gina Talamona said Friday after Zimmer became the first company to disclose the current investigation.

Biomet, Johnson & Johnson and Stryker made their disclosures in statements Monday, with Biomet specifying that a grand jury issued the subpoena at the request of the Justice Department. Biomet, Zimmer and Johnson & Johnson’s orthopedics unit, DePuy Inc., are based in Warsaw, Ind. Stryker is based in Kalamazoo, Mich.

Shares of Zimmer, the largest producer of artificial hips and knees, dropped $4.33 to $58.70. Johnson & Johnson fell $1.11 to $60.21. The company, based in New Brunswick, N.J., also announced the purchase of Pfizer Inc.’s consumer products unit for $16.6 billion.

Shares of Stryker fell $2.68 to $42.20. Biomet’s shares fell $1.80 to $33.18.